EU AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS?

JANUARY 2021 EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS?

The debate about how to regulate and ensure “digital” competition and guarantee a fair market is a global one. Jurisdictions around the world are grappling with how to handle the new tech environment – which includes the tricky issue of how to regulate the tech giants. Europe has decided to be a pioneer in the regulation of digital platforms and marketplaces with a proposed digital package – the first major overhaul of EU rules for online players for two decades.

Paris-based Clifford Chance Partner The Digital Services Act (DSA). This Dessislava Savova, who specialises in will update the e-commerce directive from tech and commercial law and leads the 2000 and introduce new rules and Clifford Chance Continental Europe Tech enhanced responsibilities for online Group, says: “The proposed digital intermediaries and platforms. “The world package is a major milestone in building is a very different place compared with 20 Europe’s digital future and strategy. years ago. Since the adoption of the What Europe does now is likely to serve e-commerce directive, new and as a reference for other jurisdictions.” innovative services have emerged, In this briefing Clifford Chance experts changing the lives of citizens and shaping explore what is covered in the proposals and transforming the way they – and what is not, what is the scope communicate, connect, consume and do of the regulation, and what this could business on a daily basis,” Savova says. mean for businesses. At the same time, this has given rise to new risks and challenges for society, What is the Digital fundamental human rights and individuals. Package? Updating the e-commerce directive by adopting the DSA is aimed at addressing The Digital Package is built on these issues and equipping the EU with two pillars: modernised rules. The Digital Markets Act (DMA). This will introduce new rules (a list of Why the DSA and the DMA obligations and prohibitions, “do’s and are game-changers don’ts”) for large online platforms that are considered gatekeepers. “What is the • They will mark the end of a fragmented rationale for the DMA proposal? European approach in Europe. The new antitrust enforcement has not been regulations will apply directly in the entirely effective, because it often simply Member States. takes too long. At its core, the DMA is • They contain “GDPR-like” provisions about introducing new rules upfront and which are likely to deeply transform not intervening after the fact,” says the digital market; for example, Savova. Several initiatives have already extraterritorial reach, very high been taken at the national level, but these sanctions, strong EU-wide initiatives are inevitably limited to the enforcement mechanisms. national territory (and gatekeepers typically operate cross-border, globally). • They provide new and extensive Without action at the EU level, national obligations for digital players. legislation has the potential to lead to • They contain targeted rules to address increased regulatory fragmentation and issues raised by “very large platforms” this is what the is (DSA) and “gatekeepers” (DMA). seeking to avoid.

2 CLIFFORD CHANCE EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? • The DSA and the DMA also raise meet the quantitative criteria are not off new challenges and questions for the hook. “The Commission can still businesses, including their scope, designate these companies as impact and interaction with other gatekeepers, but only after a market existing legislation in EU. investigation which will look at a set of qualitative metrics.” Determining who are digital gatekeepers So far, all that is known about the qualitative metrics is that the Commission The draft DMA targets so-called digital will look at key market characteristics, “gatekeepers.” The question of who such as barriers to entry created due to should be deemed a gatekeeper is at the network effects and data advantages, centre of the DMA and the Commission economies of scale, and factors has chosen to define gatekeepers around contributing to users being locked in. four main elements: “There’s a clear need for the Commission • They are active in one of eight so-called to give some robust guidance to the Core Platform Services. These include, market, perhaps even some safe amongst other things, app stores, harbours, because right now there is not search engines, marketplaces, digital enough in the DMA itself for companies advertising, and social media. to assess their level of risk with sufficient confidence,” says Vryna. • They have a significant impact on the market. They are very large companies Presumed gatekeepers are allowed to active across at least three Member argue against the rebuttable presumption, States and have a large number but the Commission has not indicated of users. what it expects successful arguments to • They control an important gateway for include. We can perhaps draw some other businesses to reach customers inspiration from the economic literature creating a degree of dependency. and precedents on abuse of dominance. For instance, a company could try and • They have a durable, stable presence rebut the presumption that it controls an on the market or are on their way to important gateway by showing that, while getting there in the near future. it has a large number of users, it operates in a multi-sided market where users multi- A big driver of the DMA has been speed home on both sides, or that switching and, to make it simple to identify who is costs are in fact low. One clarification the a gatekeeper, the Commission, in the Commission has given is that it won’t first instance, applies a rebuttable accept arguments based on efficiencies, presumption. A company is presumed to i.e. where a gatekeeper admits to being a be a gatekeeper once it meets certain gatekeeper, but claims that this has straightforward measurable thresholds – countervailing benefits to customers. these relate to turnover, market capitalisation, number of users, and stability of market presence. The designation process For a company to be liable under the Stavroula Vryna, a Senior Associate, DMA, there needs to be a Commission working between Brussels and London, decision designating it as a gatekeeper. specialising in advising tech companies The designation will tie to a specific on EU competition law and regulation, service, not to the company as a whole. says: “What is clear is that these However, that does not mean that the thresholds have been set low enough to gatekeeper’s obligations do not touch catch more than just , , services for which it is not designated a Apple, and . The gatekeeper – in fact the gatekeeper will Commission expects approximately need to take a closer look at the 20 companies to be captured. Some will ecosystem around the gatekeeper service undoubtedly see those criteria as overly and the ancillary services involved. It inclusive, and this will definitely have an remains to be confirmed whether it effect on the amount of lobbying pressure will be the Directorate General for throughout the legislative process.” Competition or some other part of the She adds that companies that do not

CLIFFORD CHANCE 3 EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? Commission that will have the • Article 5(a). This prohibits combining competence to designate gatekeepers. personal data sourced from a core In practice, companies who self-assess platform service with data from other that they meet the quantitative thresholds services offered by the gatekeeper or must notify the Commission; and once from third-party services. This will affect the Commission has all the information it primarily companies active in digital needs, in principle, the designation is a advertising, particularly Google and relatively quick process, finalised within Facebook, who use the combination of 60 days. For companies that don’t meet data to gain an advantage in targeted the quantitative thresholds, the advertising. For example, Google Commission needs to open a market combines data about users’ searches, investigation and decide within 12 months. data derived from Android devices The Commission will keep these about users’ locations and activities, designations under review and will revisit data derived from its cookies about them at least every two years. users’ activities on 80% of the world’s commercial web sites, data from users’ A comparison with the YouTube viewing, and much more. But, DSA criteria as currently drafted, Article 5(a) would still allow such data combination if The DSA has a much broader scope than users consent to it, which – depending the DMA and it captures companies on how this consent provision is primarily based on their activity rather interpreted – might mean this article than on their market significance. It ends up being meaningless. establishes four tiers of obligations. Vryna says: “Imagine them like four concentric • Article 6(j). This obliges search engine circles: On the outer layer, we have a few gatekeepers to provide their rivals with basic obligations for all online access on fair, reasonable and non- intermediary services (which range from discriminatory terms to user-generated Internet providers to social media). search data. So Google would be Further in, we have obligations for the required to share virtually all data subset of hosting services (such as cloud generated by its users on its search providers). In the third circle, we have engine, including the data about obligations for online platforms, such as users’ long-tail searches. This could app stores and social media; and finally, have a dramatic impact on search at the centre of the circle, we have the engine competition. most extensive obligations which apply to • Article 5(c). This obliges gatekeepers so-called Very Large Online Platforms to allow business users (1) to advertise with more than 45 million users in the EU.” to customers “acquired via the core platform service” and (2) to transact What rules does the with them without needing to use the DMA impose on gatekeeper’s own mechanisms – for gatekeepers? example, its payments systems. This seems inspired by the European The Commission has drawn the Commission’s current investigations prohibitions and obligations in the DMA into Apple’s App Store rules and would from existing antitrust precedent as well require Apple to allow companies such as on its currently open investigations. as to communicate with iOS “It’s clear the rules are based mainly on users – for example regarding concerns about conduct by the Google, promotions. And it would allow such Amazon, Facebook and Apple (GAFA). companies to contract with their One can basically go through the list of customers without being forced to use do’s and don’ts and assign nearly each Apple’s In-App Purchase mechanism. rule to conduct by one of the GAFA about This will also become relevant to which concerns have been expressed,” Google given the latest amendments to says Brussels-based Partner and co-chair the rules, which bring of Clifford Chance’s global competition them closer to the Apple approach. practice, Thomas Vinje. The DMA proposal contains a list of 18 “do’s and • Article 5(f). This prohibits tying by don’ts.” Those that could have a real gatekeepers. It prohibits a gatekeeper impact on the market include: from conditioning access to a

4 CLIFFORD CHANCE EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? gatekeeping core service upon implement to comply. Gatekeepers may registering for or subscribing to, any also request such guidance from the other core platform. This would Commission – but they may not refrain prohibit, for example, Google from from compliance while awaiting guidance. tying access to YouTube to use of its If the Commission has concerns about demand-side platform adtech services. implementation of an Article 6 obligation or a gatekeeper requests Commission • Notification of acquisitions. This guidance, the DMA proposal envisions a provision has not received the attention “regulatory dialogue” between the it seems to deserve. Gatekeepers must gatekeeper and the Commission. If the inform the Commission of their Commission has opened proceedings, it intended acquisitions of any other will have six months to issue its decision. digital services before closing the transactions, irrespective of whether Vinje says: “The Commission claims that the merger control thresholds for EU or the rules are “clear and unambiguous”. national filings are met. This notification I have my doubts, in light of the breadth requirement should be seen in and arguable vagueness of some of the combination with the Commission’s rules. The specification process announcement that from mid-2021 it envisioned by Article 6 seems implicitly to will start accepting referrals of mergers acknowledge that the Article 6 rules are by Member States for review even not necessarily entirely clear. Especially as when these Member States lack a lot of the do’s and don’ts were clearly jurisdiction themselves over those inspired by specific cases and specific mergers. As a result, more tech deals companies, one of the Commission’s are likely to be brought under the biggest challenges will be to make them Commission’s jurisdiction. So, more applicable to all gatekeepers, irrespective smaller mergers might be reviewed of business model. This will likely mean by the Commission, whereas they that significant time will be spent previously might not have been obtaining ad hoc clarifications.” reviewed by any antitrust authority. But the substantive merger control One question arising in this context is rules remain unchanged, so we might whether the rules might become clearer well not see any significant increase in during the legislative process leading to a the mergers actually prohibited or final text. Vinje noted that “we can hope subjected to remedies. for clarification on certain points, but in light of experience with numerous EU The DMA obligations are split into two legislative processes, we should not separate articles, Articles 5 and 6, which count on it. As the renowned nineteenth has caused a lot of confusion. Article 5 is century German statesman Otto von entitled simply “Obligations for Bismarck noted, there are two things of Gatekeepers.” But Article 6 is entitled which one does not wish to know how “Obligations for gatekeepers susceptible they are made: sausage and legislation. of being further specified.” Vinje says: And Bismarck did not live to see the EU “One key point must be kept in mind legislative process.” here: Both Articles 5 and 6 are self- executing. They establish a duty of compliance for gatekeepers without any How will these new rules need for the Commission’s intervention. operate and what is the The difference between them is that the scope of enforcement? Commission deems the Article 5 rules to The procedural rules in Chapter V provide contain straightforward restrictions which the Commission with a broad range of are easy to implement. The Article 6 rules investigative, enforcement and monitoring are deemed more complex, apparently as powers. These powers appear to be at least in some cases they don’t just broadly the same as under the require the gatekeeper to refrain from competition rules, but in some aspects certain practices, but also to give rivals they are even more far-reaching. For access to certain assets.” So, for Article 6, example, the Commission can request the Commission has reserved for itself the access to a platform’s ‘crown jewels’ ability to open proceedings to specify the such as algorithms and data bases, exact measures the gatekeeper needs to

CLIFFORD CHANCE 5 EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? adopt interim measures and, as a last to monitor remedies imposed on or resort, impose structural remedies in case accepted by gatekeepers to ensure of systematic non-compliance. effective compliance.

“As with the designation of gatekeepers, In a case of non-compliance with the the enforcement of the procedural rules obligations under the DMA, the would be exclusively for the Commission,” Commission could impose fines on a says Düsseldorf-based Partner, Michael gatekeeper up to a maximum of 10% Dietrich, who advises clients on EU and of its total turnover for a violation of the German competition law with a particular obligations in Articles 5 and 6. Fines focus on digital platforms and data. “But, of up to 1% or periodic penalties of up if and to what extent this would prevent to 5% of average daily turnover the Member States from applying their can be imposed for violations of own rules in addition to the DMA is a formal requirements; for example, the question that will be subject to a lot of supply of incomplete, incorrect or further debate.” misleading information.

What can the Companies do have the right to appeal a Commission do? decision from the Commission at the EU Court of Justice which would also include For market investigations into the the General Court as the court of first designation of gatekeepers and instance. We are not aware that the proceedings for example, regarding non- Commission has any plans to limit an compliance, the Commission has two appeal only to the Court of Justice. As main investigation tools: unannounced under the competition rules, the European inspections and information requests, Courts would have unlimited jurisdiction though the latter will be by far the most to review decisions, i.e. they not only important and most commonly used tool. review the legality of the decision, but also if it is equitable and reasonable. Under the DMA, the power to gather information appears to be limited mainly by the principle of proportionality. Within Will the DMA speed its boundaries, the Commission can things up? basically request all information necessary “How much faster is it really going to be? for the application of the DMA, regardless One of the main reasons for the DMA of the ownership, format, storage medium was speed. In my view it is primarily the or location of that information. Equally, time the Commission needs to adopt a information requests can not only be decision in the first instance which would directed to the addressees of an have a significant impact on speed. investigation, but also to third parties, Unlike, let’s say, competition law which is including any natural or legal person and an old farm horse, with all the fact public authority, body or agency within specific evidence about market definition, the EU Member States. To provide the theories of harm and evidence supporting addressees with the possibility to check the negative effects on competition which that the requested information does not are required for the finding of an abuse of go beyond what is strictly necessary, the dominance, the DMA could turn out to be Commission has to indicate the purpose a racehorse,” says Dietrich. The of the request, specify the information requirements for a gatekeeper appear to required and fix the time limit to respond be straightforward and, secondly, the along with the maximum penalties for the decision making process under the DMA supply of incomplete, incorrect or is well-known after decades of practical misleading information. experience with competition law proceedings. “Initially, the biggest The procedural powers are rounded up challenge will be the application of the by interim measures against gatekeepers gatekeeper obligations in Articles 5 and 6, if there is a risk of serious and irreparable since a lot of issues will be unclear at the harm for business users or end beginning and, therefore, inevitably lead customers before a decision on non- to quarrels with the Commission. compliance has been adopted. In However, over time and with an emerging addition, the Commission has the power body of decision practice, the teething

6 CLIFFORD CHANCE EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? problems of the DMA should be sorted terrorist propaganda, child sexual out fairly quickly. Then, the Commission exploitation, etc.) rather than trying to likely will be in a position to conclude at directly tackle the more opaque category least straightforward market investigations of “legal but harmful” content (such as and proceedings in less than 12 months. disinformation). “I think that’s really in This would be a giant leap forward an attempt to avoid inflaming concerns compared with the average time about impacts on freedom of expression.” currently required to wrap up an Article 102 investigation in Brussels,” he says. “The aim of the DSA is to keep the rulebook broad— and to complement The Digital Services Act already existing issue-specific instruments such as the Audiovisual Media Services The DSA has a much broader scope than Directive and the digital copyright reform the DMA. Its main goal is to introduce that was passed in 2019,” he says. new rules and enhanced responsibilities for online intermediaries and platforms The proposal also doesn’t define what is with regard to content, safety of users illegal — that has been left as a matter of online, audit, reporting, traceability and EU and Member State law. The DSA is transparency requirements for all digital about streamlining reporting and providers, as well as certain specific rules establishing a system of oversight. This for very large online platforms. means that to further combat illegal content online, all online platforms which The Commission has decided that the provide hosting services will be required existing EU e-Commerce Directive, which to put in place user-friendly notice and was adopted in 2000, is still fit for action mechanisms, which allow third purpose and has decided to retain the parties to notify the platform of illegal key principles of the safe harbour regime. content on their services. Many, if not It protects intermediaries from liability for most, platforms have these type of the content they host, so long as they act mechanisms – the difference now being expeditiously to remove content once that they will become more standardised made aware, as well as maintaining the and thereby, the Commission hopes, ban on a general monitoring obligation. more user-friendly. “That being said, the proposal does address a shortcoming under the Freedom of expression previous regime whereby platforms faced “In general on content and content the dilemma of being exposed to moderation, the Commission has had to increased liability as a result of taking walk a bit of a tightrope,” says Mikes. voluntary steps to monitor content. “The concern often voiced with these Strangely enough taking action which types of laws is that they run the inherent increases awareness also increased risk of over-incentivising platforms to just liability and therefore inaction incurred mindlessly automate take-downs to avoid less liability – the less you knew the less liability. The need to protect freedom of you could be held accountable for,” says expression is a constant refrain in the Amsterdam-based Senior Associate proposal. The Commission’s clear hope Andrei Mikes who specialises in tech seems to be that by placing requirements regulatory matters. on platforms to explain their decisions and provide the means to challenge That would change under the DSA decisions – that that will work to proposal. In contrast to the previous counterbalance any incentive to over- regime, providers of intermediary remove content.” services are still protected from liability even though they carry out voluntary He adds that the DSA proposal may own initiative investigations or other change over time and that as it contains activities aimed at detecting and a whole set of completely new rules, well removing illegal content. beyond liability and content moderation, these are likely to trigger intense debate On the content side, the Commission has and lobbying in the coming months. chosen to limit the DSA’s regulation to speech that’s illegal (e.g., hate speech,

CLIFFORD CHANCE 7 EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? New obligations under Finally, there is a set of other specific the DSA requirements on VLOPs which include having to designate a dedicated The proposal introduces a whole package compliance officer, undergo an annual of new obligations, including all online independent audit and in some instances platforms displaying advertisements even share data with authorities and online will be required to ensure that academic researchers to assess the individuals using their services can identify impact of services offered to society. “in a clear and unambiguous manner and “Some of which will undoubtedly cause in real time” that the information displayed some headaches for the major social is an ad; whose ad it is; and an media players as well as other very large explanation as to why you are seeing a online platforms,” he says. particular advertisement.

Another notable requirement is the new Governance and sanctions obligation on traceability of business under the DSA users in online market places. Under the The penalty mechanism proposed means proposal, all online platforms will be that failure to comply can result in fines of required to vet the credentials of third- up to 6% of the annual turnover of the party suppliers, which conclude distance provider or platform depending on the contracts with consumers through their gravity, frequency and duration of the platform. Traders will be required to breach. The Member States or the provide certain essential information to Commission may also impose fines of up the online platform, including a self- to 1% of the annual turnover for providing certification by the trader that it only offers incorrect, incomplete or misleading goods or services which comply with EU information as under the DMA. law. This “KYC” principle for online marketplaces (which is a familiar feature “However, a clear challenge exists,” says in more heavily regulated sectors such as Michael Dietrich. “Since the DSA is a fintech) is aimed at making it harder for horizontal regulation, there’s no pre- sellers of illegal products to set up within existing universal regulator across all a marketplace under a new name. Member States to take on DSA oversight. The fairly distinct issues, for example Very Large Online Platforms (VLOPs) will content/speech moderation versus also be subject to more burdensome e-commerce/marketplace requirements requirements under the DSA proposal. like the so-called “KYC”- requirements, They will have to adhere to transparency and the application of the DSA to both obligations on the ads they display as tiny and giant businesses adds a further well as having to be open about the main layer of complexity which exceeds the parameters of algorithms used to offer capacity of any single national body.” content on their platforms (for example, how does a ranking mechanism work on The approach tabled is that EU a search engine, or recommendations on Member States will each be required to a booking platform?) and the options for appoint a ‘Digital Services Co-ordinator’, the user to modify those parameters. The who will be responsible for ensuring proposal states that an option must be compliance with the DSA, verifying provided to users that is not based on platform user numbers in the EU and profiling. VLOPs are also required to designating platforms as VLOPs at least perform risk assessments ahead of every six months. launching new services — with an accompanying obligation to mitigate The Commission itself would be identified risks. “It’s a thought-provoking responsible for the enforcement of the notion to try to force major platforms to subset of obligations that only apply to be proactive about societal risks. It looks VLOPs. This has sparked some reactions inspired, at least in part, by elements of from privacy advocates and academics the GDPR — such as the requirement for who fear the Commission’s enforcement data protection impact assessments. powers would be too great and even Though I expect plenty of devil will be in amount to a power grab for a body that the detail — and especially how effective they don’t see as an independent authority. oversight proves to be,” says Mikes.

8 CLIFFORD CHANCE EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? Finally, the DSA proposal includes a new – unless the Parliament and Council oversight entity, namely the European change those timings. By way of context, Board for Digital Services (EBDS). the e-commerce directive was adopted Together with the relevant Member State rather quickly — it took 20 months from agencies represented on the Board, it proposal by the Commission to would co-ordinate joint investigations and publication in the OJEU. GDPR on the work on setting standards led by the other hand took four years and four Commission as EBDS chair. months from Commission proposal to publication in the OJEU. What happens next? “Both proposals will attract a lot of It is important to remember that these are attention, a lot of lobbying. We should proposals, put forward by the European therefore expect the Parliament and Commission. They are not yet laws as Council to table hundreds of they must first be adopted by the amendments. This will be one of the co-legislators; the biggest shows in town for the next and the Council of the EU (where couple of years,” she says. Member States are represented). This will be done according to the ordinary legislative procedure, previously known as The European co-decision. Under this process, both the Parliament’s position Parliament and the Council must jointly Last year the Parliament adopted three agree the final texts. They can amend the reports on the DSA package, one of Commission’s proposal and the changes which was by the Internal Market can be fairly minor or rather major. Committee (IMCO). IMCO is key to the Members of the European Parliament process because it will likely take the (MEPs) and Member States must agree lead on both the DMA and DSA. Its the exact same wording of the final text report set out in a fair amount of detail before it can become law. They have up what MEPs wanted to see covered by to three readings in which to do that, the Commission proposal, including in although we increasingly see new laws relation to gatekeeper platforms, online adopted in a single reading. advertising, use of algorithms, and how they wanted EU and national level Following adoption, the texts will be authorities to cooperate and co-ordinate. legally scrubbed, translated into the 24 “Following on from the storming of the official languages and then published in US Capitol, which seems to an extent the Official Journal of the EU (OJEU). The to have been organised on social media, legislative procedure can take anything MEPs are considering should the new from 18 months to several years. Some rules only tackle illegal content? proposals never become laws, but are What do you do about harmful content?” withdrawn because it becomes clear that says Orton. political consensus is impossible. What about jurisdictions Gail Orton, Clifford Chance’s Head of EU Public Policy, who is based between outside of the EU? Brussels and Paris, says: “We know there EU Member States seem to be welcoming is broad political support for updating the the proposed new enforcement tools for rules on e-commerce and for introducing the Commission in the draft DMA. new rules on online platforms. So we can However, Member States with prominent expect the Parliament and Council to competition authorities, such as France adopt an ambitious timeline, perhaps with or Germany will be keen to ensure that the process taking between 18 months they continue to play an active role in and two years. The legal scrubbing and antitrust enforcement given that they publication in the Official Journal can take have been deeply involved in the another couple of months so entry into enforcement of competition law against force could be in Q4/2022 or Q1/2023.” large digital platforms.

According to the current drafts, the DSA This is particularly evident in Germany, will apply three months after publication with the adoption in January of a new and the DMA six months after publication competition law providing the

CLIFFORD CHANCE 9 EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? Bundeskartellamt with additional powers • The UK targets companies with to deal with anti-competitive behaviour by so-called Strategic Market Status, digital platforms. Michael Dietrich expects which is very close conceptually to the Germany to seek some sort of concept of the gatekeeper. However, compromise about sharing responsibility there is expected to be no presumption for the enforcement of the rules of Strategic Market Status (SMS) in the applicable to large Internet platforms in UK regime based on quantitative Europe, echoing a call from the German thresholds. To identify gatekeepers the Parliament on the European Commission CMA will perform a more qualitative to leave room for the application of assessment of companies’ market national competition law provisions in power in a specific service. parallel to the DMA. • The UK is also envisaging a compulsory code of conduct for companies with France has the Council Presidency from Strategic Market Status. But contrary January to June 2022 and it has said that to the DMA, the code will be ad hoc, it wants to finalise the discussions on following a market study, and tailored these proposals under its Presidency. to the company and the activity in question, which gives the CMA the As for the U.S., Thomas Vinje says, flexibility to adapt it to different business “I doubt there will be much appetite in models. It is a much more “effects- the new Biden Administration for seeking based” approach. to tone down the DMA. I would think this is especially true in light of the clear • The UK regime also deals with merger objective of the new Administration to control. It will oblige companies with restore cross-Atlantic ties. In any event, SMS to make the CMA aware of all I doubt any eventual U.S. efforts to their transactions, and for those water down the DMA would be welcome transactions that meet specific or have any impact on this side of thresholds, a merger control notification the Atlantic.” will be mandatory and suspensory, while the ordinary UK merger control The UK, post Brexit, is working on a new regime is voluntary/non-suspensory. pro-competition regime for digital It is important to note that this platforms. Stavroula Vryna says, “we obligation is expected to apply, not don’t yet have a legislative proposal in the only to the services for which a UK. But we can see the direction of company has SMS, but to all the travel, amongst other things, from the company’s activities. The UK regime CMA’s recommendations to the could be adopted slightly earlier than government. There are obvious similarities the DMA, but still is more than a with the DMA – the UK regime is also ex year away. ante regulation to reign in powerful digital platforms.” However, she adds that there are also quite important differences:

10 CLIFFORD CHANCE EU DIGITAL SERVICES ACT AND DIGITAL MARKETS ACT: WHAT ARE THE IMPLICATIONS? CONTACTS

Dessislava Savova Thomas Vinje Gail Orton Partner Partner, Chairman, Head of EU Public Policy Paris Global Antitrust Group Paris T: +33 1 4405 5483 Brussels T: +33 1 4405 2429 E: dessislava.savova@ T: +32 2 533 5929 E: gail.orton@ cliffordchance.com E: thomas.vinje@ cliffordchance.com cliffordchance.com

Michael Dietrich Andrei Mikes Stavroula Vryna Partner Senior Associate Senior Associate Düsseldorf Amsterdam London T: +49 211 4355 5542 T: +31 20 711 9507 T: +44 207006 4106 E: michael.dietrich@ E: andrei.mikes@ E: stavroula.vryna@ cliffordchance.com cliffordchance.com cliffordchance.com

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